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The Reserve Bank of Australia is likely to cut the cash rate today following July’s inflation results, according to a prominent mortgage industry professional.
Mortgage Choice chief executive officer John Flavell has said that the “less than impressive” inflation result in July is likely to encourage the Reserve Bank to cut the cash rate today.
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“Looking at the latest Consumer Price Index data from the Australian Bureau of Statistics, consumer prices rose by 0.4 per cent over the last quarter and 1.0 per cent over the year to 30 June,” Mr Flavell pointed out.
“While these results were largely in line with market expectations, the yearly rise of 1.0 per cent is incredibly low by historical standards,” he said.
Mr Flavell also highlighted that before July’s inflation results were revealed, markets had already priced in another rate cut, most likely due to increased volatility off the back of Britain’s vote to leave the European Union.
“The market has definitely priced in a further cut (or cuts) to the cash rate, which has been reflected in the yield curve,” he said.
Even if the Reserve Bank doesn’t cut the cash rate today, another rate cut reduction is expected this calendar year, according to Mr Flavell.
“Rates will more than likely fall lower this year. If and when this happens, all eyes will look to Australia’s lenders to see if they follow suit and pass on the rate cuts to their customers,” he said.
[Related: Reserve Bank decides on cash rate]
